For five trading sessions in a row, the price of the euro currency pair moves against the US dollar, EUR / USD, in an upward correction range. This is a result of the resistance level of 1.2233 that was tested, the highest of the currency pair two and a half months ago, before settling around the level of 1.2223 at the time of writing. In the early days of last month, the world's most famous currency pair fell to 1.17, when the problems of purchasing a vaccine and a third wave of infections raised fears that the continent would be left behind in the expected economic recovery this year.
Commenting on the performance of the EUR / USD currency pair. “This is the final defense of the top at 1.2349, the high in 2021,” says Karen Jones, Head of Technical Analysis for Currencies, Commodities and Bonds at Commerzbank, a one to three-week target at 1.2349 and three to - six months forecast at 1.2619
The rise of the euro came as a reaction to the major continental economies taking their first steps in the reopening process alongside the United Kingdom, which was among the fastest vaccines in the world in the field of vaccination against the Corona virus, indicating a much lower range, if any. Some in the analyst community had also speculated on Tuesday that the European Central Bank (ECB) may be ready to announce some form of reduction in the amount of European government bonds it buys under the bank's pandemic-inspired quantitative easing program as part of a June policy decision.
"There is a reasonable case that the forex market will price that in the run-up to the June meeting, which means that the euro may remain supported against the dollar," says Joe Toki, an analyst at Argentex. The lower expectations may be responsible for the recent and continuing increases in bond yields in the Eurozone, which in turn could have played a role in raising the EUR this week.
In return, high inflation would only be positive for the US dollar if it pushed the US Federal Reserve to put forward plans to tighten monetary policy and raise US interest rates. Accordingly, Lee Hardman, a currency analyst at MUFG, says: "But these initial hopes have faded for the time being due to the cautious response from Fed officials in recent days." However, much depends on the trajectory of the dollar and price action in the US government bond market over the coming days as US bond yields have developed normally this year to pull the carpet off risk currencies.
The dollar gained and many other currencies fell last week after US inflation surprised markets to rise sharply stronger than expected when it rose to 4.2% annually for April, more than twice the target level of the Federal Reserve. However, the US central bank has made clear in recent months that this kind of above-target rate growth is exactly what it is trying to achieve with a super-easy monetary policy that has seen interest rates cut again near zero and buy around $ 120 billion of US government bonds per month.
Do not change in my technical view of the EUR / USD currency pair, as the general trend is still up, and the important events of the day may change the direction or remain the current trend to move towards stronger ascending levels, the closest to which is currently 1.2275, 1.2330 and 1.2420 on straight. On the downside, according to the performance on the daily timeframe chart, there will be no real reversal of the general trend without breaching the psychological support level of 1.2000.
Regarding the economic calendar data today: The consumer price index reading in the euro area will be announced, and then at a later time the most important event, which is the announcement of the minutes of the last meeting of the US Central Bank
